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Imaging, printing and computing systems manufacturer Hewlett Packard (HPQ) continues to show good strength, despite weakness in the broader market over the past couple of days. Ever since the stock rallied hard October 9 after a positive analyst meeting, it has had good upside momentum, which it looks to be able to keep up. The trade I see setting up here comes on the back of this newly-found positive momentum.

Let’s first take a look at the longer-term chart of HPQ to gain some perspective of where the stock currently stands. On the multi-year chart looking back to 2010, we don’t see a whole lot of technical nuances to hold on to, yet what is worth noting is that HPQ is one of relatively few stocks trading lower today than it did at the 2009 broader market lows. Much of this is due to the commoditization of the PC market/box makers. There are other casualties out there too, just look at Dell (DELL). My main point of reference on this longer-dated chart is the black line, which connects the dots of the two highs we have seen over the past two years in early 2012 and again just this past August. This line also currently acts as an upside magnet after the stock developed a higher low on October 9 and thus serves as my upside target.

On the daily chart, note how strongly the stock’s breakout on October 9, out of its down-trending channel was. In late September the stock also pushed below its 200-day simple moving average (red line), which HPQ however quickly overcame on October 9. The rally since then has been sharp but well supported, and earlier this week pushed the stock past its 100 day moving average (blue line). From here, a gap-fill near $25.40 is the first order of business, followed by $27.50, i.e. the August highs.